The American Arbitration Association (“AAA”) amended its Commercial Arbitration Rules effective October 1, 2013. Implemented to reflect the ongoing and growing need for commercial parties to achieve efficient alternative dispute resolution, many of these Rule changes are significant. Moreover, while the AAA has detailed international arbitration rules that apply by default to international disputes when the arbitration clause does not identify which set of AAA rules are to be used, commercial agreements between international parties often specifically call for the application of the AAA’s Commercial Rules. Certain key changes are summarized below.
Preliminary Hearing: The AAA created new Rule 21 to provide the arbitrator with discretion, depending on the “size and complexity of the arbitration”, to set a preliminary hearing as soon as practicable following his or her appointment. The Rule provides that the hearing can take place in person or by telephone, and notes that the “parties should be invited to attend the preliminary hearing along with their representatives." The Rule reflects the AAA’s recognition of the need for arbitrators to effectively manage the arbitration process and provides arbitrators with the tool to do so in the form of a hearing shortly after the claim is filed. The Rule also resembles a recent update made through Article 24 of the International Chamber of Commerce (“ICC”), which requires the tribunal to convene a case management conference shortly after the filing of the claim. However, unlike with the ICC Article 24, under which a case management conference is mandatory, AAA Rule 21 still empowers the arbitrator with the discretion to hold a preliminary hearing.
Dispositive Motions: In response to commercial arbitration parties’ request for the availability of dispositive motions in arbitration, the AAA implemented Rule 33. This new Rule specifically gives the arbitrator the authority to “allow the filing of and make rulings upon a dispositive motion.” However, under the Rule, the arbitrator may only allow for, and rule on, a dispositive motion if s/he “determines that the moving party has shown that the motion is likely to succeed and dispose of or narrow the issues in the case.” The Rule does not identify a particular standard for such a showing, though the plain language of the Rule appears to give the arbitrator broad discretion in determining whether and how to rule on a dispositive motion.
Emergency Measures of Protection: The AAA created a new Rule – 38 – to enable parties to apply for emergency interim relief before an arbitrator who will be appointed within 24 hours of the AAA’s receipt of the emergency relief request. This Rule change differs from the prior version of the Rule, under which emergency measures were optional and had to be agreed on by the parties either post-dispute or within the arbitration clause. In particular, amended Rule 38 provides that a party may seek emergency relief by notifying the AAA and the other parties to the arbitration. The AAA is then required to appoint, “within one business day or receipt of notice,” a “single emergency arbitrator designated to rule on emergency applications.” No later than “two business days after appointment,” that arbitrator is required to “establish a schedule for consideration of the application for emergency relief.” The arbitrator must provide “reasonable opportunity” for all parties to be heard and may order a hearing; though the arbitrator also has discretion to provide, in lieu of an in-person hearing, for a proceeding by telephone or video conference or on “written submissions”. New Rule 38 also resembles – though does not mirror – revised ICC Article 29, which allows parties to seek the appointment of an emergency arbitrator where urgent relief is required before a full arbitral panel can be constituted.
Fixing of Locale: AAA Rule 11, formerly Rule 10, was changed to reflect that parties may raise complex legal arguments regarding the appropriate venue of an arbitration. Subject to the issuance of a final determination by the arbitrator following appointment, the Rule authorizes the AAA to make an initial determination on the venue of the arbitration hearing when the parties’ arbitration agreement is silent and the parties cannot agree on the venue. The Rule also grants the arbitrator, “at the arbitrator’s sole discretion,” the “authority to conduct special hearings for document production purposes or otherwise at other locations if reasonably necessary and beneficial to the process.”
Disclosure: AAA Rule 17, formerly Rule 16, now requires the parties and their representatives to make disclosures about possible conflicts regarding a potential arbitrator. The Rule also contains a new provision – (a) – which provides that a party’s (or representative’s) failure to disclose a potential conflict may result in that party’s waiver of the right to object to any arbitrator.
Conduct of Proceedings: AAA Rule 32, formerly Rule 30, gives the arbitrator the discretion to allow for the presentation of evidence by alternative means, other than in person, including “video conferencing, internet communication, telephonic conferences and means other than an in-person presentation.” The arbitrator may provide for any of these alternatives under the Rule so long as the parties have a “full opportunity” to present “any evidence that the arbitrator deems material and relevant to the resolution of the dispute and, when involving witnesses, provide an opportunity for cross-examination.”
Evidence by Written Statement: AAA Rule 35, formerly Rule 32, grants the arbitrator the authority, at the request of either party, to order the appearance of an “essential” witness who is unable or unwilling to testify in person or otherwise at the hearing. The arbitrator may order the person to appear “at a time and location where the witness is willing and able to appear voluntarily or can legally be compelled to do so.”
Majority Decision: With a view toward stream-lining discovery issues in arbitration, AAA Rule 44, formerly Rule 40, consolidates the decision-making authority regarding discovery with the panel chairperson. The Rule provides that, “absent the objection of a party or another panel member, the chairperson of the panel is authorized to resolve any disputes related to the exchange of information or procedural matters without the need to consult the full panel.”